SEBI Extends Deadline By Two Years To Split Chairman And Managing Director Posts
The Securities and Exchange Board of India has deferred by two years to April 2022 its directive for listed companies to split the roles of chairman and managing director.
The decision was taken in view of demand from corporates and to keep compliance burden low in the wake of the current economic scenario.
According to SEBI norms, the Top 500 listed entities by market capitalisation were mandated to comply with the requirement of separation of the roles of chairperson and managing director or chief executive officer with effect from April 1, 2020. The norms were aimed at improving corporate governance structure of listed companies.
Now, the date of implementation of the regulatory provision has been deferred to April 1, 2022, according to a gazette notification dated Jan. 10.
While the notice did not specify any reason for the move, sources said the decision has been taken in view of demand from corporates and ease the compliance burden amid economic slowdown in India.
The capital markets regulator has been receiving various representations with respect to regulatory requirements including from industry bodies. They highlighted the present levels of unpreparedness of listed entities to comply with the directive.
Data from stock exchanges reveal that at present, around 50 percent of the top 500 listed companies are in compliance with the regulatory provision.
Currently, many companies have merged the two posts as chairman and managing director, leading to some overlapping of the board and management.
A large number of big companies—including Reliance Industries Ltd., Bharat Petroleum Corp. Ltd., Oil and Natural Gas Corp. Ltd., Coal India Ltd., Wipro Ltd. and Hero MotoCorp Ltd.—have a single person holding the twin post of chairman and managing director.